Operating Profit Reached RMB47.985 Billion

Bank of China spokesman Wang Zhaowen announced on October 18 that the Bank of China Group (the Bank), actively following the government macro-regulation measures, strengthening the internal control and risk management and vigorously fostering all businesses, achieved a good operating result in the first three quarters 2004.

As of the end of September, the Bank's operating profit reached RMB47.985 billion, up 23.7% over the same period of last year. Domestic operations made the main contribution to the rise of the profit: RMB36.437 billion of the profit came from domestic operations, up 30% year on year; and RMB11.548 billion was from overseas operations, increased by 7.

4%.

The Bank's asset quality has been improving significantly. The Bank had rounded out the disposal of non-performing loans(NPLs) by the end of September. The Bank's asset quality improved significantly and the NPL ratio decreased sharply. As of the end of September, the balance of NPLs stood at RMB109.

699 billion, a drop of RMB242.017 billion from the beginning of the year; and the NPL ratio was 5.16%, down 11.12 percentage points. The NPLs of domestic operations dropped RMB225.3 billion or 12.8 percentage points, to RMB93.947 billion or 5.47%; and that of overseas operations was down US$2.02 billion, to US$1.

903 billion, with the NPL ratio being 3.86%, 4 percentage points less than the beginning of the year.

All business developed steadily. By the end of September, the Bank's total assets amounted to RMB4117.4 billion, increased by 275.2 billion or 7.16% over the last year-end. Business development was featured by the following two characteristics:

1. The domestic operations' RMB deposits and loans developed steadily. The foreign exchange deposits rallied, and the increase of spot exchange lending slowed down.
By the end of September, the domestic operations' RMB deposits increased by RMB236 billion: of it, the corporate deposits recorded an increase of RMB105.8 billion, the savings deposits increased RMB130.2 billion. RMB lending increased by RMB192.2 billion representing an RMB110.2 billion rise in corporate lending? including paper discounting??and an RMB82 billion rise in retail loans compared with the beginning of the year. The domestic operations' foreign exchange deposits decreased by US$1.059 billion, while spot exchange lending recorded an increase of US$3.607 billion. Affected by such factors as the rise of the interest rate of US dollar, the domestic operations' foreign exchange deposits set to rally, and the increase of spot exchange lending inched down.

2. The domestic operations' fee-based business went forward well.
In the first three quarters, the domestic operations' international settlement business reached US$258.955 billion, an increase of 43.82% year on year; the income of bank card business reached RMB0.86 billion, up 49%; and the fund distribution business amounted to RMB15.92 billion, up 246.09%, with the income of fund custodian increased by 223% to 86.67 million.